ASOS expansion costs hit profits

ASOS insisted it was keeping its sights on the long-term picture after expansion costs sent half-year profits plunging by 22 per cent.

The group saw pre-tax profits drop to £20.1 million in the six months to February 28 from £25.7 million a year earlier despite notching up a 34 per cent hike in retail sales to £481.7 million.

The company has a massive distribution centre in Barnsley - extended last year - which sends clothes to customers around the world.

The firm said it had attracted 2.2 million new customers in the first half of the year, taking the total to 8.2 million. But profits had fallen after it spent money on its website, warehouses and its China business, which it set up in October.

The company is planning to spend £68m on investment this year.

ASOS - which stands for ‘As Seen On Screen’ - targets 20-somethings. It warned last month the extra investment would hit profits, and its shares fell eight per cent on the news.

“These investments will accommodate future annual sales of at least £2.5bn,” the company said.